Charge-Off Rate Calculator

Charge-offs are the final cash reality of credit loss. This calculator computes the charge-off rate against rent.

Gross charge-offs

Annual rent

Recoveries

Net charge-off rate

1.00%

Gross charge-off rate

1.20%

Net charge-off $

$35,000

How the math works

Net rate = (charge-offs − recoveries) ÷ rent. Tracks credit loss net of collection wins.

Trend charge-off rate rolling-4-quarter to see through seasonality. A rising trend 3-4 quarters = reposition collection strategy, tighten screening, or raise deposit minimums.

How to Use

Enter charged-off balances.
Enter annual rent.
Enter recoveries.
Read net charge-off rate.

Frequently Asked Questions

Healthy?

Multifamily: 1-2% gross charge-off. Good operators: under 1%. Class-C: 3-4%. Watch trend more than absolute level — rising charge-offs = warning sign.

Recovery timing?

Post-move-out recoveries from collection agencies: 10-25% of charged-off amount over 2-3 years. Subtract from gross to get net charge-off.

Forecasting?

Roll rates predict charge-offs 60-120 days out. Apply bucket roll percentages to current aging to forecast next-quarter charge-off. Helps budget bad debt reserve.

How does this interact with the rest of the capital stack?

Each tier of the stack affects the next. Senior debt constrains LTC and DSCR. Mezz and pref consume equity spread. Interest rate hedges protect DSCR but cost premium. Always model the full stack holistically — optimizing one tier alone often degrades another. Institutional underwriters run three or four scenarios across the stack before committing capital.